Here at Gauntlet, we try to focus our participation in governance on outcomes we know well - market risk management and parameter optimization. We often abstain from votes like this, but after careful internal discussion we are supporting this proposal**
There has been great feedback, much of which we hope is addressed, but that can happen before or after the proposal passes. However, the value of creating greater regulatory certainty in the space is very high, and we need to bias towards action here. Our team met with the CFTC in 2019 and regulators have had every intention of creating a regulatory environment in which crypto can operate for quite some time. However, the regulatory “progress” over the past years has been limited to a few misguided efforts like The STABLE Act. It is clear from our discussions with knowledgeable parties that creating regulatory certainty will be a herculean task. While the sum requested is large, the sum needed is even larger. DeFi should expect this to be the first of many such requests, not just to the UNI community, but to other large DAOs in the space as well. Many of the options discussed, like a small budget to fund an exploratory committee, do not provide a clear path to creating meaningful progress. This is a hard problem, and we shouldn’t kid ourselves when considering other options.
If you look at Uniswap governance, there have been two proposals passed since it was deployed last year. The Uniswap DAO is a $7B organization that has, for all intents and purposes, done two “things” in 9 months. You could chalk this up to token holders being fiscally conservative, but calling this conservative is a euphemism that obscures a somber truth - the DAO is in a state of almost total stasis. Protocols like Compound have been more successful, with 30 or so proposals passed in that same time period. But don’t be mistaken - even 30 “things” is almost nothing for an organization of this size, which could have a tremendous impact not just for UNI token holders but on the world itself. DAOs need to take more risk, but this risk should be justified by a real chance of an outsize reward. The regulatory risk in crypto is one of the largest impediments to adoption and this Political Defense Organization is a group of people with decades of experience advocating in Washington effectively for improved technology policy. There are no guarantees, but the chance of success here is very credible. Gauntlet hopes this is the first of many more proposals that think big and take a swing at hard problems like regulatory risk.
If we had one piece of feedback, it would be that compensation for PDO employees be denominated in UNI (or other DeFi protocol tokens), so that there is better incentive alignment. After all, the PDO should provide value to UNI holders and this would cement that commitment. However, this is not blocking feedback - we trust the committee members to balance this with other tradeoffs that arise. This trust might be misplaced, but we have much reason to think it’s not and we are willing to take the risk that we are wrong here. In the end, if you don’t risk being wrong, you don’t ever have a chance to be right. This could be a step forward, not just for UNI, not just for DeFi, but for decentralized organizations to enter a new era of faster and greater progress.
** Of course, when the final proposal is published, we’d have to re-evaluate in the face of any material changes.